Sri Lanka’s local assembly and automotive component manufacturing sector has become a significant pillar of the nation’s economy, driving job creation, conserving foreign exchange, and fostering technical innovation. 

Operating under the Ministry of Industries’ Standard Operating Procedure (SOP), the industry currently boasts over 17 assembly plants producing a range of vehicles, including motorcars, SUVs, motorcycles, and electric three-wheelers. An additional 17 more investors are preparing to launch their operations in Sri Lanka, signalling robust industry growth. 

The sector has directly employed over 5,000 technically skilled workers, including recent graduates and on-the-job trainees, contributing to the development of Sri Lanka’s human capital. Indirectly, it supports more than 10,000 jobs, creating an extensive ecosystem that sustains the livelihoods of thousands of families. 

During the temporary suspension of vehicle imports, the local assembly industry demonstrated its strategic importance by reducing reliance on imported Completely Built Units (CBUs). This shift preserved valuable foreign exchange reserves and underscored the viability of local manufacturing. Global automotive giants such as Hyundai, TVS, Bajaj, Mahindra, TATA, Lanka Ashok Leyland, DFSK, Foton, JAC, JMC, Chery, Proton, Wuling, and BAIC have established operations in Sri Lanka, showcasing the industry’s capacity to attract renowned international brands. 

Sri Lanka’s component manufacturing sector has evolved to produce high-quality automotive parts, including batteries, tyres, bumpers, exhaust systems, seats, plastic parts, composite parts, liners, wire harnesses, rubber components, and metal components. These advancements have elevated the sector to international standards, positioning Sri Lanka as a competitive player in the regional automotive supply chain. 

The industry is setting ambitious yet achievable goals. Within the next five years, it aims to export vehicles and components, increasing component export revenues from $ 800 million to $ 2 billion and creating an additional 45,000 jobs. Drawing inspiration from countries like Thailand and Malaysia, Sri Lanka’s strategic geographic location, government incentives, and developing supply chain infrastructure provide a robust foundation for this vision. 

As the Government deliberates lifting the temporary suspension on CBU imports, industry stakeholders urge the implementation of a competitive tax structure that prioritises locally assembled vehicles. Such measures will sustain the sector’s growth trajectory, attract further investments, and secure its long-term viability.

Sri Lanka’s local assembly and component manufacturing industries represent more than economic activity — they symbolise the nation’s industrial progress and untapped potential. With strategic policies and continued support, this sector can propel Sri Lanka toward sustainable industrial and economic prosperity.

THE local assembly industry, under the  Standard Operating Procedure (SOP) of the Industries Ministry, comprises more than 17 assemblies producing motorcars, SUVs, motorcycles, electric three-wheelers, light trucks, and heavy trucks. These assemblies are supported by local component manufacturers who produce a range of parts such as batteries, tyres, bumpers, exhaust systems, seats, plastic parts, composite parts, liners, wire harnesses, rubber components, and metal components.

During the temporary suspension of vehicle imports, many component manufacturers have recruited over 5,000 technically qualified employees, including students and on-the-job trainees, significantly contributing to the country’s human capital development. Additionally, this industry has indirectly created more than 10,000 jobs over the past five years, establishing a complete ecosystem that risks being threatened if unregulated imports are allowed. They risk losing all the advancements made over this period.

Although the SOP is a Government policy to promote local industry, the Local Assemblers’ Association President said, the new decision to open up completely built unit (CBU) imports will discourage more than 20 local assemblies of international brands operating in Sri Lanka. These brands include Hyundai, Mahindra & Mahindra, TATA, Lanka Ashok Leyland, DFSK, JMC, Chery, Proton, Wuling, and BAIC for four-wheelers, and TVS, Bajaj, and Hero for two-wheelers, effectively covering the below-250cc motorcycle market with several more to come. This portfolio of international brands, established within a short period, is a significant achievement for any country.

Another crucial aspect is the component manufacturing sector, which has grown from nothing to one capable of developing components, scaling down manufacturing processes, and meeting international standards. This growth has enabled major brands to set up operations in Sri Lanka, promoting the country’s technical capability on the world stage.

This industry expects vehicle and two-wheeler exports within the next five years, and notably, component exports to increase from $ 800 million to $ 2 billion, creating 45,000 jobs in the industry. This follows the example of countries like Morocco, Thailand, Mexico, South Africa and Turkey, which have leveraged strategic advantages such as location, government incentives, and strong supply chains, to develop successful local assembly industries. This has led to significant economic benefits, including job creation, GDP growth, and increased exports. Moreover, a thriving local assembly industry not only contributes to GDP and job creation but also enhances the country’s industrial image, attracts further foreign investments, and fosters technological and economic growth.

The assembly and local manufacturing industries request the Government to maintain a fair and competitive tax structure between locally assembled and CBU imports once the temporary suspension on CBUs is removed.

The Sri Lanka Automobile Component Manufacturers Association (SLACMA) congratulates the NPP leader Anura Kumara Dissanayake on being elected as the new President of Sri Lanka. The association looks forward to NPP’s futuristic industrial policies to uplift the automobile industry. “It is commendable to see automobile assembly and automobile component manufacturing included in the NPP Policy Statement,” said the association’s President Dimantha Jayawardena.

“Manufacturing automobile components has been chosen as a thrust industry,” he said. “The Standard Operating Procedure (SOP) to promote the local industry with domestic value-addition of locally manufactured components has helped the local manufacturers to enter global supply chains. The SOP makes it mandatory to use local components. To do this, local manufacturers have to go through stringent manufacturing and quality standards of the Original Equipment Manufacturers (OEMs).”

He also said that currently there are global brands assembling in Sri Lanka. The project  is monitored by the Ministry of Industries with a Cabinet appointed Committee with representatives from the Ministry of Finance, Sri Lanka Customs, Import Control Department, Ministry of Transport, Department of Motor Traffic and several other government institutions that monitor compliance.

“Currently Sri Lanka exports USD 200 million worth of auto components, USD 200 million worth of automobile related wire harnesses and other electric items, and USD 400 million worth of rubber components, tires and solid tyres, bringing the total to around USD 800 million in the sector. The Ministry of Industries has a 20-year master-plan. With the increase of electric vehicle (EV) manufacturing, SLACMA is looking into promoting Sri Lanka as a wire-harness and other electric component manufacturing hub for electric vehicles. With the NPP policy statement clearly defining the development of automobile manufacturing and component manufacturing, SLACMA and its 60-manufactuer members are very positive about the future. SLACMA will continue to work with stakeholders and policymakers to promote the industry and make more export-oriented revenue by entering global supply chains,” he added. “The 10-year plan of the Ministry of Industries, the Export Development Board and the Board of Investment (BOI) is to achieve USD 3 Billion through exports from this sector. We are confident that this can be achieved.”

Government statistics indicate that the local vehicle assembly industry has generated over 3,200 direct and indirect employment opportunities in the past few years, said Director, Engineering Division, Industrial Development Board (IDB), Nishantha Weerathunge.

He was speaking at an event hosted by the Automotive Component Manufacturers Association of Sri Lanka (SLACMA).

“The industry has helped secure around 5,000 jobs in companies involved in the motor vehicle business and over 20,000 indirect employment opportunities providing support services for these companies.

“The Government’s initiative to develop local vehicle assembly has been a lifeline for these companies and their employees during the economic crisis in the absence of completely built motor vehicle imports.

“In Sri Lanka, talk of a manufacturing economy often begins only when the country is in economic trouble. The promotion of industry as a government policy was very slow due to the lack of a commitment by the authorities and the lack of knowledge among the people.

As a result, the automobile manufacturing/assembly and automotive component manufacturing industry that sprang up, faltered.

“Although the history of the industry goes back to the 1980s, the industry was not fully supported until the end of 2020. It was in that, the Ministry of Industries along with other Ministries and Departments introduced a Standard Operating Procedure (SOP) related to the assembly/manufacturing of automobiles and manufacturing of automotive components.

“Based on the Government’s policy of taking Sri Lanka to a manufacturing economy, the Ministry of Industries has been entrusted with the lead role in the development of the country by developing the local manufacturing industry sector.

“For this purpose, twenty manufacturing industries have been identified, among which automobile assembly/manufacturing and automobile component manufacturing take a leading role.

“A Consultative Committee on the production and assembly of automobile components related to this industry has also been established by the Ministry of Industries with members representing the industrialists engaged in this industry,” he said.

“Vehicle assembly/production took place in Sri Lanka from time to time. “However, with the aim of regulating and promoting the industry, a Standard Operating Procedure (SOP) was prepared only in 2020, incorporating the opinions of experts in the field and in accordance with international standards and received Cabinet approval on 11/1/2021,” Weerathunge said.

The main factors that led to the implementation of the standard operating procedure is the large amount of foreign exchange that goes out of the country for the import of vehicles and the need to ensure a minimum vehicle requirement for the country, following the suspension of vehicle imports due to the Covid epidemic. The local assembly companies are not allowed to add imported components bought from the local market and try to prove that they have added more than 20% value.

Sri Lanka’s automobile assembly is experiencing significant growth and development with the involvement of world-renowned brands including Hyundai, Proton, BAIC, DFSK, Wuling, Mahindra, TATA, Bajaj, TVS, JMC and Lanka Ashok Leyland emphasizing the favourable environment for investment. The approval to assemble a wide range of vehicles including SUVs, Cars, Two-Wheelers, Double-cabs, Trucks and Buses has paved the way for a diversified automobile assembly industry in the country catering to various consumer needs. Nwow electric bikes, KD Rize, Dyno and Senaro are also involved in the local assembly of motorcycles. More than four assemblers including JAC and FOTON will be starting assembly in Sri Lanka and by the end of the year more than 30 assemblers will be in operation in the local automobile assembly industry.

These world-renowned assemblers must provide a domestic value addition of more than twenty percent by using locally manufactured automobile components. Many of the local component manufacturers have gone through an extensive product development and product approval process to maintain the global original equipment (OE) standards maintained by the international brands. With an increase in both component manufacturing and assembly, the industry is poised for a period of further expansion.

Following the Standard Operating Procedure (SOP) launched in 2021, there are over fifteen automobile and motorcycle assembly plants currently operating in Sri Lanka. Four more assembly plants are due to begin operations within the next three months and another eleven have been registered by the Ministry of Industries. A Special Cabinet appointed Committee oversees the SOP and its governance.

Chairman of the Sector Advisory Committee for Automobile for the Ministry of Industries, Dimantha Jayawardena said, “Sri Lankan automotive component manufacturers went through one of the toughest business cycles from 2020. The Sri Lanka government is promoting automobile component manufacturing as a trust sector for growth and has a plan to grow exports from USD 200 million to USD 1 billion.

The temporary suspension on motor vehicle imports has increased the market for locally assembled vehicles. The planned establishment of an R&D and testing facility by the Industrial Development Board (IDB) indicates a commitment to innovation and quality assurance within the industry, to further enhance Sri Lanka’s competitiveness in the global automotive market. The Automobile Industry Council (AIC) initiated by the government is also laying out the curriculum for the required technical and vocational education for automobile assembly.”  

The Ministry of Industries is sponsoring fifty percent of the cost of the IATF certification for local automotive component manufacturers which is a mandatory requirement when manufacturing components for international brands. Sri Lankan companies with the IATF certification will have greater acceptance and trust from global brands for automobile assembly.

Jayawardena further stated that, “The consistent and collaborative policy of the government is greatly appreciated by the automotive assembly industry. Global brands are also keen to invest in Sri Lanka because the country lies astride major supply chains linking trade between the east and west. More and more Sri Lankan consumers are also showing a preference for locally assembled vehicles. This is a great boost to the industry as it further creates engineering and technical-related jobs. The Ministry of Industries Sector Advisory Committee is looking into supporting all the prospective assemblers and component manufacturers to increase jobs up to 45,000 in the sector and to make Sri Lanka a global automobile manufacturing hub by 2037, in keeping with the 20-year master plan for the automobile assembly industry.”

Image Caption :

1. Hon. (Dr.) Ramesh Pathirana, Minister of Industries
2. Shantha Weerasinghe, Secretary, Ministry of Industries
3. Dimantha Jayawardena, Chairman of the Sector Advisory Committee for Automobile for the Ministry of Industries

The brand-new component manufacturers have surpassed the granting of 5,000 new employment appointments in the Western Province over the past few months. This was stated by Dimantha Jayawardena, President of the Sri Lanka Automobile Component Manufacturers’ Association.

Earlier this year, the Ministry of Industries together with the stakeholders of Sri Lankan Automobile Assembly and Automobile Component Manufacturers Industries launched a Standard Operating Procedure (SOP) for the Automobile Manufacturing / Assembling Industry and the Automobile Components Manufacturing Industry in Sri Lanka.

Commenting on the developments since then Jayawardena said, “Industry stakeholders have been working hard during the intervening period to make maximum use of the new environment that has been created by the launch of the SOP. In the recent past, many have passed out of the Vocational Training Institute with NVQ Level 4 qualification. Many of them will be absorbed by the private sector companies involved in the manufacturing of automobile components. In the next two to three years, we expect the industry to generate around 45,000 jobs.”

A variety of automobile components are currently being manufactured in Sri Lanka and exported to various countries. Among them are pneumatic and solid tyres, batteries, rubber components including bushes and carpets, silencers, seats, radiators, body panels and bumpers even for racing cars, impact sensor switches for seat belts and airbags, and truck trailers.

“A new truck manufacturer is expected to enter the market soon,” Jayawardena said. “Ten thousand locally manufactured motorcycles will be released for sale by 1st October 2021. These bikes will feature locally manufactured batteries, seats, wire harnesses, plastic and rubber items, as well as tyres.”

The 2021 Budget introduced in November last year included several policy initiatives to encourage the local manufacturing of automobile components.

“Last year, SLACMA submitted a 10-year master-plan to the Finance Ministry as a crucial step to take the Local Assembly Industry and Component Supply to the next level, as they seek quality certification from their regional counterparts to boost growth,” Jayawardena said.

The Sri Lanka Automotive Component Manufacturers’ Association (SLACMA) and officials of the State Ministry of Skills Development, Vocational Education, Research and Innovations met recently to discuss ways and means of creating high-tech job opportunities through the development of the automobile industry in Sri Lanka. 

The discussion which viewed the possibilities of adapting to ensure the global demand for more sustainable, accessible and efficient mobility in the years to come, considered crucial points such as the extent to which autonomous vehicles (AVs) contribute to reducing local pollution and decarbonising the transport sector. How they will limit the number of cars on the road and the amount of space they use, and whether they will improve accessibility for all and help to cut mobility costs. 

SLACMA President Dimantha Jayawardena commenting on the initiative said: “We expect to meet the President in the near future to discuss the formulation of government policy for the development of this industry over the next 10 years. 

“It is imperative that we qualify and train our workforce to be capable of meeting the market demands. Therefore, the partnership between SLACMA and the Ministry of Skills Development, Vocational Education, Research and Innovations is one of the most progressive steps that have been taken towards building the automotive component industry in Sri Lanka.”

He added: “Although the automotive industry in Sri Lanka has a history of nearly 60 years, there is a large sum of foreign exchange spent annually on importing vehicles. What is now seen in Sri Lanka is only the maintenance and servicing of vehicles. There are many foreign companies looking forward to starting vehicle assembly plants in Sri Lanka and we ought to be ready with the necessary skill, qualification and standards to be able to stand on par with other international players.” 

Among those present at the meeting were officials from the Tertiary and Vocational Education Commission (TVEC), Department of Technical Education and Training (DTET), National Apprentice and Industrial Training Authority (NAITA), Vocational Training Authority (VTA) and the Ceylon German Technical Training Institute (CGTTI). Following the meeting, it was decided that the institutions under the Ministry which provide training in the field of automobile engineering and the 65 manufacturing institutions that are members of SLACMA would organise a one-day workshop to foster cooperation among the institutions.

The TVEC and NAITA will also update the curricula relating to the National Competency Standards (NCS) prepared by the TVEC in respect of identified subjects. It was also decided that the services of experts in motor engineering from SLACMA will be secured to establish new competency standards where such standards do not exist in respect of identified new job opportunities.

It has also been decided to obtain training facilities for the various advisors from the different training institutes to communicate the syllabuses to the students. This training will be sought from the Automotive Research Association of India (ARAI). On-the-job training for the students will be secured from member institutions of SLACMA. 

NAITA, strives to meet the goals of the government of Sri Lanka by providing a competent and confident professional workforce conforming to the industrial requirements and standards. It is the primary State institution with the capacity to provide industry acceptable technical and vocational training in different disciplines for youth throughout the island and has facilities for industrial and institutional based training with comprehensive and modern training facilities and techniques.

SLACMA plays a major role in policy-making related to automotive component manufacturing in the country. It also encourages and enhances the development of the automobile component parts industry.

Automotive Component Manufacturers are optimistic about growth following the Covid-19 and Economic Crisis. President of the Sri Lanka Automotive Component Manufacturers Association (SLACMA), Dimantha Jayawardena said, “I guess the worst is over. Sri Lankan automotive component manufacturers have gone through the toughest business cycle from 2020 and through the current economic crisis.”

“Most manufacturers have survived,” he said. “Some are still trying to make the best following the temporary suspension of imported brands, while others are suffering due to low market demand as well as inability to source raw materials.”

In addition to being President of SLACMA, Dimantha Jayawardena is Chairman of the Automobile Sector Advisory Committee for Automobile Components Manufacturing & Assembly Related Industry – Ministry of Industries (MoI), and a Member of the Industrialisation Commission appointed by the President. He is also a member of the Board of Directors and Advisor to several companies.

Jayawardena said that the Ministry of Industries was able to help most of the manufacturers during the hardest times by the allocation of the Indian Credit Line to source raw materials. “It was extremely commendable that the Ministry of Industries took an initial step to help most of the manufacturers who were affected by the temporary suspension, by reviewing and lifting the restrictions following justification of the imports to the MoI. In addition, high interest rates have been severely impacting the industry, and many small-scale manufacturers had to wind up operations during the past year.” He said that the Sri Lanka Automotive Component Manufacturers’ Association has tried its best to support its members by getting involved in necessary interventions via the Ministry of Industries to safeguard the industry.

“As the industry tries to come out of the worst times, SLACMA is now in the process of getting its manufacturers certified by the International Automotive Task Force (IATF) to the 16949 international standard. This endeavour is 50% funded by the Ministry of Industries. SLACMA will also work with financial institutions to obtain their support for small manufacturers to secure loans to upgrade factories and machinery, in order to increase the quality standards and be more competitive in the global supply chains.”

The short-term plan of SLACMA is to work with regional and local counterparts to support JVs and technical collaborations, as it will help the local manufacturers to enter global supply chains much faster, he said. “As the worst is over, there is a bright future for the local manufacturers with the opportunities in the local and export markets with the current earnings being around USD 200 million per year. The 10-year plan of the Ministry of Industries, the Export Development Board and BOI is to achieve USD 1 Billion through exports from this sector. We are confident that this can be achieved.”

Minister of Industries, Wimal Weerawansha recently appointed the chairman and members of the Advisory Council of the Automobile Assembling and Automobile Components Manufacturing Industries in Sri Lanka. The appointments were made as part of the programme to focus greater attention on the twenty industries coming under the purview of the Ministry. The council consists of representatives of the respective government institutions and private sector manufacturers.

Dimantha Jayawardena, President of the Sri Lanka Automobile Components Manufacturers’ Association was appointed Chairman of the Advisory Council.

S.M.D.L. De Alwis, Secretary, State Ministry of Transport; Mrs. T.V.D.D. Karunaratne, Controller General of the Department of Imports and Exports Control; W.M.R. Wijekoon, Director, Ministry of Industries; Indika Sugathadasa, Director, Export Development Board; Mahinda Jayawardena, Director, Sri Lanka Customs; Prasanjith Wijayathilaka, Director, Sri Lanka Board of Investment; S. Thennakoon, Director, Department of Motor Traffic; Eng. W.A.P.K. Nishantha, Director, Industrial Development Board; Shantha Jayasena, Chairman Lanka Ashok Leyland PLC; and W.S. Ferrnando, Deputy Chief Engineer Ceylon German Technical Training Institute were appointed as members representing government institutions. Dr. K.V.D.S. Chathuranga, of the Moratuwa University and Dr. H.K.G. Punchihewa of the Peradeniya University represent the universities while Asela Lihinikaduwa, Director, Micro Cars (Pvt) Ltd.; Ravith Silva, President, Sri Lanka Automobile Service Providers Association; Suren Galagoda, Director, Ideal Motors (Pvt) Ltd.; Kosala Madawala, (Head, Automobile Assembly), Diesel & Motor Engineering PLC; Dr. Shiyantha Cooray, Chairman, Leader Battery Manufacturing (Pvt) Ltd.; Mahesh Gunathilaka, CEO, UNIMO Enterprises Ltd.; Geethal Anthony, CEO, TVS Lanka (Pvt) Ltd.; Rajiv Chandrakumar, COO, Accolade Engineering (Pvt) Ltd.; and Sandeepa Wijesingha, CEO, Nevorp Corporation (Pvt) Ltd., were the other appointments.

Addressing the gathering at the distribution of the appointments, Minister Weerawansa said that he was prepared to grant space at the Sooriyawewa Industrial Zone in the future, for industrialists allied to this activity. He stressed that the Industries Ministry was ready to swiftly develop and maintain the vehicle assembly industry. He said that with the introduction of the Standard Operating Procedure (SOP), the number of automobile assembly plants in the country grew from 3 to 10 and thereby opened the way for many more industrialists with international brand names to come into the country.

Also present on the occasion were the Secretary to the Ministry of Industries, Major General Daya Ratnayake (Retd.), Additional Secretary, Chaminda Pathiraja, Advisor to the Ministry, Sunil Hettiarachchi together with other officials of the Ministry of Industries, officers of government institutions and industrialists.

 

The Sri Lanka Automotive Component Manufacturers’ Association (SLACMA) yesterday welcomed the 2021 Budget, describing it as a ‘new era for local automotive component manufacturers’.

In appreciation of the Government’s efforts to encourage entrepreneurs in the automobile industry engaged in vehicle assembly using locally-manufactured brand-new auto components, SLACMA President Dimantha Jayawardena said the 2021 Budget had proposed local automotive assembly using 30% of locally-manufactured brand-new parts; promotion of local automotive products by giving them preference in Government tenders (domestic preference) and elimination of unfair competition for local auto manufacturers by preventing under-invoicing by importers.

SLACMA has submitted a 10-year master-plan to the Finance Ministry as a crucial step to take the local assembly industry and component supply to the next level, as they seek quality certification from their regional counterparts to boost growth. 

The association reiterated the role of the Ministry of Finance under the Prime Minister, Ministry of Industry and Supply Chain under Wimal Weerawansa and Dilum Amunugama, MP, the State Minister of Vehicle Regulation, Passenger Transport Services, Railway Carriages and Automobile Industries, the Department of Motor Traffic, Export Development Board and the Board of Investment of Sri Lanka for their active support in driving this policy forward. 

The SLCMA said it was currently in talks with seven world-renowned automobile companies, in order to supply locally-assembled and manufactured automobile components. Jayawardena expressed confidence in a better future for the industry in creating many jobs in the months to come.